Huron Consulting Group Inc. (HURN)·Q3 2025 Earnings Summary

Executive Summary

• Record quarter: revenues before reimbursable expenses rose 16.8% year over year to $432.4M; adjusted diluted EPS grew 25% to $2.10, with adjusted EBITDA margin expanding to 15.6% of RBR .
• Street context: Huron delivered a revenue beat vs consensus and a meaningful adjusted EPS beat; EBITDA was slightly below consensus while margins expanded. Guidance was tightened on revenue and raised on adjusted EPS (midpoint to $7.60) for FY25, with adjusted EBITDA margin range reaffirmed *.
• Segment mix: Healthcare led with 19.9% YoY RBR growth and margin expansion; Education grew 6.9% with margin improvement; Commercial RBR up 26.6% but margin compressed on mix and acquisition ramp .
• Strategic narrative: Management cited the “strongest” performance improvement environment in healthcare, robust AI/automation deployment across offerings, and an inflection in Commercial demand (strategy and financial advisory) into Q4, supporting confidence in 2025/2026 trajectory .
• Capital allocation: YTD repurchases reached $152.5M (1.085M shares), and year-end leverage targeted ~2.0x adjusted EBITDA; Q3 DSO improved to 76 days, with free cash flow of $85.3M in Q3 .

What Went Well and What Went Wrong

What Went Well

• Healthcare strength and pricing environment: “This is perhaps the strongest market that we’ve ever seen,” with broad-based demand across performance improvement, financial advisory, revenue cycle managed services, strategy, and digital; organic healthcare RBR grew 18.6% YoY .
• Margin expansion: Company adjusted EBITDA margin rose to 15.6% of RBR (from 14.8% YoY), and healthcare segment operating margin expanded to 30.9% (from 27.1%) on revenue growth outpacing compensation .
• AI/automation traction: Management highlighted expanding use of AI and automation to improve client outcomes and delivery efficiency, including machine learning models boosting collections in revenue cycle managed services and research administration AI to automate grant data processing .

What Went Wrong

• Commercial margin compression: Commercial segment operating margin declined to 16.4% (from 24.5%) on higher compensation and contractor expenses and mix shift toward digital offerings; acquisitions are in transition and expected to be accretive in 2026 .
• Corporate costs: Unallocated corporate expenses rose to $56.5M (+$9.7M ex comp plan and restructuring), driven by support personnel, software/data hosting, and M&A-related legal/professional costs .
• GAAP profitability optics: Net income margin fell versus Q3 2024 (6.9% vs 7.2%), partially reflecting higher interest expense and corporate cost growth; GAAP EPS growth (+16.3%) lagged adjusted EPS (+25%) .

Financial Results

Segment breakdown

Capabilities mix

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “This is perhaps the strongest market that we’ve ever seen… broad-based demand across… performance improvement, financial advisory, revenue cycle managed services, strategy and digital.” — Mark Hussey, CEO .
• “We continue to expand the use of AI and automation across our offerings… established and deployed machine learning models that have helped us lower our costs while boosting collections for clients.” — Management .
• “We’re updating our annual guidance… RVR $1.65–$1.67B, adjusted EBITDA 14–14.5% of RVR, and adjusted EPS $7.50–$7.70.” — Management .
• “The decline in [Commercial] margin is reflective of… mix shift toward our digital offerings… and the transition period for certain acquisitions that we expect to become accretive in 2026.” — CFO .
• “We believe strong demand across our core end markets positions us well to achieve our full-year 2025 RBR and earnings guidance while establishing a solid base for continued growth in 2026.” — CEO .

Q&A Highlights

• Sustainability of healthcare outperformance: Pipeline at record highs with larger, integrated scopes (strategy, FA, digital) and strong conversion continuing into October; leaning into demand with targeted hiring .
• Commercial inflection: Restructuring/turnaround demand rising; strategy momentum improving with Wilson Perumal integration; shorter conversion cycles benefiting Q4 setup .
• Managed Services utilization and staffing: Very high utilization; hiring closely tied to contracted demand, including scaling India team with low turnover supporting delivery .
• Performance-based fees: 2025 saw lower % contingent vs 2024 on client preference; mix could shift back toward performance-based in 2026 given late-year sales activity .
• Education digital mix: Emphasis on core ERP (financials/HCM) implementations that set the foundation for AI/automation at scale; stable demand and strong start to Q4 .

Estimates Context

Q3 2025 results vs Wall Street consensus (S&P Global)

Forward quarter (Q4 2025) Street outlook (S&P Global)

Values retrieved from S&P Global.*

Where estimates may adjust: Street likely raises adjusted EPS and revenue trajectories for FY25 given beats and guidance raise; near-term EBITDA expectations may be tempered in Commercial given margin commentary and acquisition ramp, while Healthcare margins/supportive mix underpin consolidated margin stability .

Key Takeaways for Investors

• Healthcare-led upside with accelerating performance improvement demand and margin expansion supports the raised EPS guidance; this is the core driver of near-term earnings power .
• AI/automation is becoming embedded across delivery, with explicit client ROI examples; expect secular tailwinds for digital and managed services offerings into 2026 .
• Commercial is a tale of two lines: demand inflecting (strategy/FA) but margins pressured near term on mix and acquisition integration; look for accretion in 2026 and margin normalization toward guidance .
• Capital discipline remains intact: improved DSO (76 days), strong Q3 free cash flow ($85.3M), and YTD buybacks ($152.5M); leverage targeted ~2.0x by year-end .
• Guidance quality improved: narrower RBR range and higher EPS midpoint; tax-rate visibility (23–25%) adds modeling clarity, while segment margin ranges signal where profitability will land in FY25 .
• Trading setup: Near-term catalyst is confidence in Q4 growth embedded in guidance; any evidence of Commercial margin stabilization or incremental healthcare wins could extend the rerating on FY25/26 EPS power .
• Medium-term thesis: Durable growth across Healthcare and Education, integrated commercial platform post acquisitions, and AI-driven delivery advantages should sustain above-industry RBR growth with improving consolidated margins into 2026 .

Notes:
- 8-K/press release Q3 2025: financials, segment data, KPIs, and guidance **[1289848_0001628280-25-046762_hurn2025930exh991.htm:7]** **[1289848_0001628280-25-046762_hurn2025930exh991.htm:10]** **[1289848_0001628280-25-046762_hurn2025930exh991.htm:12]** **[1289848_0001628280-25-046762_hurn2025930exh991.htm:13]** **[1289848_0001628280-25-046762_hurn2025930exh991.htm:5]** **[1289848_09b723d64f13436c952b785a649d9f24_0]** **[1289848_09b723d64f13436c952b785a649d9f24_5]**.
- Q2 2025 press release: prior-quarter benchmarks and guidance history **[1289848_9adf964b42054937b8e61c8acc3b03ce_7]** **[1289848_9adf964b42054937b8e61c8acc3b03ce_14]** **[1289848_9adf964b42054937b8e61c8acc3b03ce_15]** **[1289848_9adf964b42054937b8e61c8acc3b03ce_10]** **[1289848_9adf964b42054937b8e61c8acc3b03ce_4]**.
- Q3 2025 call: qualitative themes, tax rate, cash flow/DSO/net debt, and margin commentary **[0001289848_2209240_1]** **[0001289848_2209240_5]** **[0001289848_2209240_7]** **[0001289848_2209240_6]** **[0001289848_2209240_12]** **[0001289848_2209240_14]**.
- S&P Global estimates marked with *.